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Demand and operating cost forecasting accuracy for toll road projects

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  • Welde, Morten
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    Abstract

    Inaccurate forecasts represent a major source of risk in road and toll projects because they could result in financial difficulties or even bankruptcy. This paper focuses on demand and operating cost forecasting accuracy for Norwegian toll projects by comparing the forecasted and actual levels of traffic and operating costs. The differences among the types of projects and the effects of project size, time and demand ramp-up are also examined. Our study finds that traffic forecasts for Norwegian toll projects are fairly accurate, on average. However, a majority of the investigated projects experienced overestimation, and a huge general error in the forecasts suggests that this is also a source of risk that merits greater scrutiny. Inaccuracies are common among all project types and sizes. Operating costs are frequently underestimated; on average, these costs are about 30% higher than estimated.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transport Policy.

    Volume (Year): 18 (2011)
    Issue (Month): 5 (September)
    Pages: 765-771

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    Handle: RePEc:eee:trapol:v:18:y:2011:i:5:p:765-771

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    Related research

    Keywords: Forecast inaccuracy Toll financing Traffic forecasts Optimism bias;

    References

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    1. Gunnar Bårdsen & Erik Amdal & Kåre Johansen & Morten Welde, 2006. "Operating costs in Norwegian toll companies: A panel data analysis," Working Paper Series 6906, Department of Economics, Norwegian University of Science and Technology.
    2. Eliasson, Jonas, 2009. "A cost-benefit analysis of the Stockholm congestion charging system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 468-480, May.
    3. Robert Bain, 2009. "Error and optimism bias in toll road traffic forecasts," Transportation, Springer, vol. 36(5), pages 469-482, September.
    4. Odeck, James, 2008. "How efficient and productive are road toll companies?: Evidence from Norway," Transport Policy, Elsevier, vol. 15(4), pages 232-241, July.
    5. Odeck, James & Bråthen, Svein, 2002. "Toll financing in Norway: The success, the failures and perspectives for the future," Transport Policy, Elsevier, vol. 9(3), pages 253-260, July.
    6. Raux, Charles, 2005. "Comments on 'The London congestion charge: a tentative economic appraisal' ()," Transport Policy, Elsevier, vol. 12(4), pages 368-371, July.
    7. Mackie, Peter, 2005. "The London congestion charge: A tentative economic appraisal. A comment on the paper by Prud'homme and Bocajero," Transport Policy, Elsevier, vol. 12(3), pages 288-290, May.
    8. Anguera, Ricard, 2006. "The Channel Tunnel--an ex post economic evaluation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(4), pages 291-315, May.
    9. Salling, Kim Bang & Banister, David, 2009. "Assessment of large transport infrastructure projects: The CBA-DK model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 800-813, November.
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